Nokia In Talks To Sell Vertu To Permira

Daniel Thomas and Anousha Sakoui, Financial Times

Monday, 30 Apr 2012 | 5:51 AM ETFinancial Times

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Nokia is in advanced talks to sell the world’s most expensive mobile phone brand to Permira, the private equity group, as the Finnish company looks to dispose of non-core assets to help turnround its devices division, the Financial Times reports.

Source: Nokia.com

Nokia Lumina 900

Permira is in discussions to acquire Vertu in a deal that will raise about 200 million euros ($265.2 million) for Nokia, which is better known for its once-dominant mass market phone ranges. It would add to the private equity firm’s portfolio of luxury and tech brands such as Hugo Boss and Valentino.

UK-based Vertu is an independently managed luxury subsidiary launched by Nokia in 1998 to tap into growing demand among the world’s wealthy for a status symbol to match similarly upmarket watches or wallets. The phones are made by hand, and can cost more than 200,000 pounds ($325,600) due to the precious metal components.

EQT, the Northern European private equity group, has also been in talks about buying the group, although those close to the process say that these are not progressing at this stage. There was also luxury goods companie interested in adding the Vertu name to their stables of upmarket brands.

Goldman Sachs is advising Nokia on the sales process. All parties declined to comment and people familiar with the process cautioned that the outcome of the sale was not yet certain.

One person with knowledge of the sale said that the value of the company was in the Vertu brand, rather than its technology, and the potential to increase sales among the emerging wealthy in countries in Asia and the Middle East.

The mobile phones, which can feature crystal displays and sapphire keys, link to an on-demand concierge service which buyers can use to book restaurants. There are also exclusive ring tones written by popular bands and orchestras, and a partnership with Ferrari, the car brand.

Sales for Vertu are not split out by Nokia, for which it is not a key part of a global business that focuses on mass market devices. Annual revenue for the Vertu business has been estimated to be between €200m euros ($265.2 million) and €300m euros ($397.6 million), with outlets selling Vertu phones in more than 60 countries. These include dedicated shops and stands in department stores such as Selfridges in the UK.

Nokia is looking to sell off non-core parts of the business and accelerate cost savings in its devices division as it focuses on driving sales of its Windows-based Lumia smartphone platform.

“There are things we’re doing today that we may have to stop,” said Stephen Elop, chief executive, after revealing a drop in first quarter sales by almost a third last week and an operating loss of €1.4 billion euros ($1.85 billion).

The group has reacted to agencies’ recent downgrades of its credit rating to junk status by reassuring that its financial position remained strong, pointing to its gross cash of €9.8bn at the end of March, and a net cash position of €4.9 billion euros ($6.5 billion).